ERP Industry

ERP Industry Consolidation – A New Trend or On-going Process? By: S. Carson, Visibility Corporation J. Aldrich, Visibility Corporation Introduction Consolidation - Goods The ERP market, over the last two decades, has 1. Software choices become clearer to the grown and consolidated with rhythmic regularity business consumer due to a smaller field of creating uncertainty in the user community. The niche players. ERP software market will likely continue to 2. Specific software applicability surfaces consolidate at the hands of the largest of software through the smaller field, allowing business vendors. It is also equally fair to say, there will consumers to distinguish application continue to be new entrants to the market as well functionality more effectively. as, growth of current industry (niche) specific software companies who focus on select markets. 3. Focused or Niche vendors, surface as Although ERP Software Industry consolidation is comprehensive, industry specific business nothing new, it constantly changes market solutions. dynamics, generating questions about its impact Consolidation - Bads on product lifecycles, supportability and ERP ROI’s. You could say consolidation creates both 1. Consolidated products many times get lost in new potential and contributes to old problems. the mix with the larger vendors multi-product menu of product offerings. Consolidation - Goods and Bads 2. Focus diminishes as the Consolidator spreads its resources across many products creating A market with consolidation generates questions uncertain support and product direction. some of which are focused on vendor and product viability. This applies to both the Consolidators 3. End of life cycle accelerates for many of the (tier 1 largest of Vendors) and all others. consolidated software products leaving the business consumer in an unclear and Change can be good and with changing market potentially costly position. dynamics as described above the end client 4. Support of an acquired product can become comes out on top. An example is with fewer ERP less effective, as consolidation generally software products it provides a clearer software includes staff reductions in product support landscape for prospective buying clients. This is and related help desk areas. better and less confusing for the customer, means less competition for the Niche vendor. The Consolidator Vendors The capabilities of the larger consolidating ERP With fewer ERP software alternatives to choose vendors can be a both a blessing and a curse. from, clients can dig deeper and be more Advantageously, their general multi-market selective. When that happens, Niche ERP segment is broad in modules offered, industries solutions surface as winners in most cases, due to served, countries supported and perceived staffing their clear focus and market driven software levels. However, they also have overhead differentiation. associated with integration and support of

ERP Consolidation – A New Trend or On-going Process? consolidated ERP products and are challenged understand your specific area of need and with product direction decisions which may be offer the expertise. Why would you not do the counter to the original vendor’s plans and the same with your business? That’s where Niche customer’s. The challenge for these vendors is the vendors offer great advantage. integration process of many overlapping products all of which are in varied stages of their product life 4. Less software overhead means optimized cycle. Other challenges can involve industry methods – ERP products are very complicated expertise spread thin which in many cases may business solutions which integrate all aspects not translate into a strong vendor/client of a business. ERP software that is focused relationship with the consumer. does not require features intended for another type of business. It is therefore optimized by The Niche Vendors design for its target market and is developed Companies requiring specific industry functional efficiently with deeper yet specific market capabilities and/or who desire a closer vendor functions. Software set-up during relationship including influence on product implementation is already streamlined due to direction may be candidates for what a Niche its inherent clean market specific business vendor delivers best. These vendors although logic. generally smaller in staffing, focus 360° of their efforts on providing strong market and product 5. Market specific focus – As an ERP business expertise. The results produce a high level of consumer, companies want to see the product customer interaction, industry specific remain in tune with their direction and trends functionality, responsiveness, product influence in their industry. Customers of a Niche vendor and access to senior management. are generally part of a smaller user community and one that collectively has common Jeffrey Lang, Visibility’s Chief Solution Officer interests. Those common interests provide observes, “Niche vendors work hard and operate much of the R&D input insuring appropriate efficiently, meeting their customers changing and product direction. For some customers it is growing needs. For these reasons the Niche also important to have access to the vendor’s vendors will continue to strive and survive. Niche senior management which in a Niche market vendors are also most commonly among the first organization is usually very accessible at the to embrace and deploy the latest generation most senior levels. technologies.” Visibility Corporation – a Niche Vendor In a consolidating ERP market, Niche vendors can end up winners because of the following reasons: Visibility Corporation is an example of an 1. Consolidation means fewer competitors - An experienced Niche ERP vendor serving the needs example of reduced competitive ERP solutions of mid-size manufacturers of complex products due to consolidation is MAPICS. Five years since 1987. This segment, which demands ago they offered three ERP solutions; XA, industry specific functionality, is sometimes Point.Man and Frontstep. Today, they are no referred to as, to-order and includes project based longer around, having been acquired by and mixed-mode manufacturers. INFOR in 2005. Today, two of the three former MAPICS ERP products have virtually In 2006, Visibility culminated a multiple year heavy disappeared from the ERP software market. R&D investment with the release of This is common when consolidation takes VISIBILITY.net ERP. This was a complete place, many products get retired. technically focused re-write of its legacy version incorporating all previous industry specific 2. Walk the Talk – Because Niche ERP software business functions using Microsoft’s® .NET companies focus on a single market they are development environment with Microsoft® SQL specialists. All staff members are immersed in Server and Oracle® database options. According a single business type and understand in to Steve Carson, Visibility’s Executive VP of Sales, detail business issues and solutions “My experience with industry consolidations in the associated with that specific market. past has shown that many Niche ERP providers gain competitive advantages as the ERP software 3. Business health specialist – Similar to market consolidates. A less complicated software personal healthcare, when looking to correct a landscape enables Niche vendors to more easily health issue you go to a specialist. They differentiate themselves. As a niche vendor, we

ERP Consolidation – A New Trend or On-going Process? view consolidation as a very positive evolution that enables us to stand out.” Conslusion The ERP market will continue to consolidate while at the same time Niche vendors will grow and thrive. Companies selecting a new ERP vendor and system will have to ask themselves what type of vendor and product best meets their needs by understanding the benefits and challenges of both options. Contact Us Corporate Headquarters Visibility Corporation 200 Minuteman Road Suite 202 Andover, MA 01810 Phone: (978) 269-6500 Fax: (978) 269-6501 sales@visibility.com www.visibility.com European Headquarters Visibility Europe Limited 3rd Floor, 1 Ashley Road Altrincham Cheshire WA14 2DT Phone: +44(0)161 927 2500 Fax: +44(0)161 928 9700 Esales@visibility-europe.com

ERP Industry

by Agcristi on Apr 22, 2010

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ERP Industry — Document Transcript